A majority of European companies doing business in Korea posted robust sales last year, but offered a mixed outlook for 2023, a business confidence survey conducted by the European Chamber of Commerce in Korea showed Thursday.
The business lobby conducted the survey together with the Korea-German Chamber of Commerce and Industry and nine other European national chambers and business councils supported by consultancy Roland Berger Seoul. A total of 184 companies, representing over 60,000 employees here, participated in the survey, with their combined transactions at 61 billion euros ($64.7 billion).
In 2022, exports from European countries to South Korea amounted to $79.2 billion, increasing by 1.5 percent on-year, the survey said. South Korea also exported more goods to Europe, the total which amounted to $75.1 billion, when compared to the previous year.
According to the survey, 59 percent of the responding companies said Korea is becoming more important for their global strategies.
In terms of profitability, 84 percent of the companies said they posted positive earnings last year. In sales, 65 percent reported more than a 5 percent increase, while 21 percent said sales remained at similar levels to the year before.
When compared to 2021, the number of companies being either “very content” or “content” about their business performance in Korea edged down despite their sales growth, from 71 percent to 68 percent in 2022. Those being either “discontent” or “very discontent” made up 9 percent of the respondents.
Fify-five percent of the respondents said they are planning to increase their investment or operational expenses here, and 36 percent said they would maintain the same level as the year before.
Despite the positive assessment, however, many companies laid out a less-than-positive outlook for the next two years. In the survey, 40 percent of the companies evaluated future sales prospects as positive, which is down 25 percentage points from 2021's figure.
Companies also said it has become more difficult to do business in Korea in the past two years, backed by responses from 53 percent of the firms. Among them, 39 percent viewed the situation as "more neutral," while 9 percent were positive about the business environment here, according to the survey.
Among the factors causing dissatisfaction for the European businesses were Korea’s legislative environment and the discretionary enforcement of regulations, the chamber said.
The report highlighted the moderate improvement in the level of transparency in policymaking, but the majority of the companies viewed business reforms implemented in 2022 had limited benefits for their businesses.
The level of transparency in policymaking and administrative issues have made progress, but are "still far from being evaluated positively,” the report said.
The Business Confidence Survey has been conducted since 2014, with the aim to assess European companies’ perceptions, successes and challenges of doing business in Korea. About 75 percent of the participants are European companies that have been active in Korea for more than a decade, the chamber said.
"The European business community continues to see the large potential to foster the bilateral economic links even more in 2023, as the European Union and Korea will celebrate 60 years of diplomatic relations," it said.
